If I move out of my (mortgaged) house and decide to rent it out, will my insurance rate go up?
If I move out of my (mortgaged) house and decide to rent it out, will my insurance rate go up once occupied by a tenant?
Asked by:tc0nn
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Maggie posted: 13 Jun at 8:29 pm
Yes, it will be more expensive as a tenant is a bigger risk.
infinite crisis 247 posted: 14 Jun at 3:51 am
it could. more imporantly than that though…if your mortgage company finds out that the home is no longer owner occupied and now a rental, they could call the note due immediately as the terms, rates, etc. are different on rental properties than residences. if you do want to move out, you had better make sure that everything is approved in writing. in some townships you will also have to register as a landlord and have the place inspected.
Trevor posted: 16 Jun at 8:47 pm
Yes, your insurance does go up. The reason is because you get additional coverage in case of disaster that covers you putting your renters up in a hotel and stuff. It also changes how your coverage works but yes, it is more expensive. Not a ton but it does go up.
Jim posted: 19 Jun at 2:06 pm
You can easily check your quotes in internet, for example here – homeinsurance.awardspace.us
chatsplas posted: 20 Jun at 7:03 am
YES it will. HOme will no longer be owner occupied.
It becomes a deductible expense on your schedule E, which it was NOT while owner occupied.
READ up on schedule E, rental property and keep good records and receipts.
Othniel posted: 22 Jun at 8:51 pm
The best solution is to call your insurance agent and tell him or her what you are thinking. That agent should be able to give you exact numbers. Then you can contact your lender to see if you are violating any loan agreement.
Once you have received specific answers and want to go ahead you need to figure out how much rent you will need to charge in order to make this work. Take into account that your property tax may go up if it is not owner occupied depending on your location.
When you have figured out the answers outlined above then you will know if it is still a good idea. You will want to decide if you want to find a tenant and manage the property yourself or if you want to hire a property manager.
Investment properties are very good for shielding income from taxes during the period of ownership. All expenses including depreciation can be claimed with the exception of payments on principal. When and if you sell the investment property you will have to pay capital gains tax and recapture tax on depreciation taken. There is a lot more to this than my simple explanation so you will want to do some research.
I trust this will help you. Investment real estate can be a very wise choice for building wealth.